Wall Street Firms’ Vulnerability Shown : Trainee Not Notable, Co-Workers Say
Stephen Sui-Kuan Wang Jr. was not exactly high on the totem pole at Morgan Stanley--and, by some accounts, the giant investment banking firm was not particularly high on him, either.
The 24-year-old junior analyst in the mergers and acquisitions department was in a program--common among Wall Street firms--in which recent college graduates learn the ropes for two years and then usually leave for graduate business school or another job.
Wang, who performed statistical analysis on a handful of mergers, was primarily a “numbers cruncher” and was due to finish the program this Friday. Some company sources say his performance was not particularly notable among the several dozen participants in the program.
Nonetheless, Wang--who was unavailable for comment Monday--had access to enough information about merger deals that he was able to perpetrate the second-biggest insider trading scheme ever, Securities and Exchange Commission officials alleged Monday.
Wang’s tips, provided to wealthy Taiwanese businessman and Morgan Stanley brokerage client Fred C. Lee, resulted in Lee’s earning at least $19 million in profits, the SEC alleges. Wang’s cut was at least $200,000, it says.
Large Amount From Relative Nobody
Wang’s scheme, if the SEC allegations are true, is incredible in that it involved such a large amount of money from someone with such a low rank--indeed, a relative nobody compared to such other big insider traders as Ivan F. Boesky and Dennis B. Levine.
“When somebody is accused of getting away with $19 million and they’re only 24 years old, that’s a hell of a story,” said a spokesman for the University of Illinois at Champaign-Urbana, which Wang attended between 1982 and 1986.
If true, it also shows the vulnerability of Wall Street firms to wrongdoing from hundreds of new temporary employees. Many major Wall Street firms have programs like Morgan Stanley’s. The highly competitive programs are seen by some as a key to entrance to top business schools. “It’s to pay your dues before going to business school, since a lot of business schools won’t take you without work experience,” said one Morgan Stanley employee. At the firm, however, the program is not a vacation--70-hour work weeks are common. “It’s basically slave labor, spreadsheet crunching,” the employee said.
Left University of Illinois in 1986
Indeed, that was the case with Wang, company sources say. Wang is said to be an American citizen and resident of Arlington Heights, Ill., a middle-class suburb of Chicago. He left the University of Illinois in 1986 just two credits short of a degree in finance, officials say.
University sources could not discuss Wang’s grades but did say he must have been a sharp student, judging by his admittance to the school’s tough College of Commerce and Business Administration.
Once at Morgan Stanley, Wang spent most of his first year in the merchant banking division, working on leveraged buyouts. Then, in March, 1987, he was transferred to the mergers and acquisitions department.
There, Wang sat in what is called a “bullpen,” a walled area that he shared with three other analysts. He did statistical analysis on only a small number of transactions. But by having proximity and access to some top merger specialists, he undoubtedly overheard conversations about other deals.
Like other employees, he was required to sign a statement under which he pledged not to divulge sensitive information. But only about a month after joining the M&A; department, Wang began leaking tips to Lee, the SEC alleges.
